River N. Props., LLC v. City of Denver

• Decision Date: 26 March 2014
• Docket Number: Civil Action No. 13-cv-01410-CMA-CBS
• Parties: RIVER NORTH PROPERTIES, LLC, Plaintiff, v. THE CITY AND COUNTY OF DENVER, and MIKE ROACH, in his individual and official capacities, Defendants.
• Court: U.S. District Court — District of Colorado

RIVER NORTH PROPERTIES, LLC, Plaintiff,
v.
THE CITY AND COUNTY OF DENVER, and MIKE ROACH, in his individual and official capacities, Defendants.

Civil Action No. 13-cv-01410-CMA-CBS

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

DATED: March 26, 2014

Judge Christine M. Arguello
ORDER REJECTING FEBRUARY 7, 2014 ORAL RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE AND DISMISSING PLAINTIFF'S FEDERAL CLAIM WITHOUT PREJUDICE

This matter is before the Court on Defendants' Motion to Dismiss. (Doc. # 7.) The motion was referred to United States Magistrate Judge Craig B. Shaffer, who issued an oral ruling on February 7, 2014, recommending that the Court grant Defendants' motion. (Doc. # 34.) The Recommendation is incorporated herein by reference. See 28 U.S.C. § 636(b)(1)(B); Fed. R. Civ. P. 72(b).

Judge Shaffer granted Defendants' Motion to Dismiss River North's federal claim by reasoning that it was not ripe for review. For the following reasons, this Court rejects Judge Shaffer's reasoning as to the ripeness of River North's federal claim but nevertheless grants Defendants' motion on an alternative ground and dismisses the federal claim without prejudice.

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I. BACKGROUND

This is a case about alleged municipal abuse of power. The target of the purported abuse was a Denver real property owner, Plaintiff River North Properties, LLC ("River North"), which rents to a tenant¹ who grows medical marijuana at the property. The alleged perpetrators are the two defendants: the City of Denver's Chief Building Official, Mike Roach, and the City itself (collectively, "Defendants").

If this Court is to believe the well-pleaded allegations contained in River North's complaint (Doc. # 3, hereinafter "Compl."), which it must for purposes of the instant motion to dismiss, Defendants have waged a multi-faceted campaign to thwart the work of River North and its tenant. As alleged by River North, Defendants have attempted to achieve this result by: (1) selectively enforcing (and over-enforcing) Denver municipal codes against River North, and (2) changing and reinterpreting the complicated architecture of Denver's zoning laws, such that River North's property is effectively worthless to its tenant.

The complaint suggests that Defendants initially opted for the selective enforcement strategy and changed tacks in favor of the zoning-law approach. The selective enforcement strategy involved, among other things, "needlessly conducting multiple inspections" at only River North's property (Compl., ¶ 18); making misleading or incorrect statements about the validity of city permits or the necessary steps for obtaining permits (id., ¶¶ 25-32); improperly revoking permits (id.); improperly refusing

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to issue permits or improperly requiring expensive changes to River North's property as a condition of issuing permits, (id., ¶¶ 42-58); shutting off the power to River North's property without notice and under the pretext that River North had not complied with building code requirements, (id., ¶¶ 68-69); and pressuring the Denver Fire Department to revoke a permit River North had obtained to use a generator to provide power to the property, (id., ¶ 70-74).

River North's theory regarding Defendants' zoning-law strategy is more difficult to follow. In short, according to the complaint, a recent change in zoning policy—which went into effect after River North had bought the real property in question—made changes to an older Denver zoning policy that applied certain classifications to both properties and the activities performed at those properties. (Id., ¶ 78.) Under the more recent zoning policy, certain "new" activities are authorized at a newly classified property only if a new (and prohibitively expensive) certificate of occupancy is obtained. (Id., ¶¶ 77-80.) Defendant Roach apparently determines what constitutes a "new use" activity (id., ¶ 78), though it is less clear if he exercises similar control over the classification of the buildings themselves. In any case, Defendants apparently have determined that this new-certificate-of-occupancy policy applies to River North's building and to the marijuana-growing activities that its tenant seeks to conduct at the property, thereby resulting in immense costs to the tenant and a loss of value in the property for River North. (Id., ¶ 82).

As a result of the Defendants' actions, River North filed the instant lawsuit, alleging, as relevant here: (1) violations of its federal constitutional rights under "the

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[C]ontract [C]lause, [and] the Fifth and Fourteenth Amendments to the United States Constitution (including the Due Process, Equal Protection and Takings [C]lauses therein)" (Id., ¶ 89); (2) a Takings Clause claim under the Colorado State Constitution (Id., ¶¶ 93-99); and (3) a claim under Colorado state law, which Counsel represents is an inverse condemnation claim. (Id., ¶¶ 100-106; Doc. # 31, at 13)²

River North initially brought this action in state court, but Defendants sought to remove the case to federal court in light of River North's reliance on a federal cause of action. (Doc. # 1, at 2.) Shortly thereafter, Defendants filed the instant motion to dismiss, advancing a number of arguments as to why River North's claims failed. (Doc. # 7.)

II. ANALYSIS

In his oral ruling, Judge Shaffer recommended that this Court dismiss River North's federal claim because it was not ripe for adjudication. He further recommended that this Court decline to exercise supplemental jurisdiction over the state law claims, as the only federal claim failed on ripeness grounds. Judge Shaffer therefore did not reach Defendants' alternative argument that the federal claim failed under Federal Rule of Civil Procedure 12(b)(6).

This Court does not concur in Judge Shaffer's reasoning but nevertheless dismisses the federal claim. First, this Court explains that it respectfully disagrees with

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Judge Shaffer as to the ripeness of River North's federal claim because Defendants waived the ripeness argument when they removed this case to federal court. Second, this Court enunciates why it nevertheless grants the motion to dismiss on the alternative ground that, as currently presented, River North's federal claim does not survive the Rule 12(b)(6) motion to dismiss. The Court considers each of these matters in turn.

A. RIPENESS

1. Standard

a. Supreme Court Precedent

First, this Court must consider the ripeness issue raised by Defendants and considered by Judge Shaffer. "Ripeness doctrine is invoked to determine whether a dispute has yet matured to a point that warrants decision." 13B Charles Alan Wright, et al., Fed. Prac. & Proc. Juris. § 3532 (3d ed. Dec. 2013 update). Determining whether a case is ripe "turns on the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm'n, 461 U.S. 190, 201 (1983) (internal quotation marks omitted); see also Nat'l Park Hospitality Ass'n v. Dep't of Interior, 538 U.S. 803, 808 (2003) (reiterating this holding).

The instant motion to dismiss concerns in part whether River North's Fifth Amendment Takings Clause claim is ripe for review. As Judge Shaffer noted, the Supreme Court addressed ripeness concerns in the context of a Takings Clause claim in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985). In that case, a plaintiff brought suit against a regional zoning

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authority, claiming that a zoning decision effected a taking of property without just compensation. Id. at 182.

Three aspects to the ripeness doctrine announced in Williamson are relevant here. First, the Williamson Court established a two-pronged test for determining whether a federal Takings Clause claim is ripe. In particular, the Court determined that the Williamson plaintiff's claim failed the ripeness test because: (1) the plaintiff "ha[d] not yet obtained a final decision regarding the application of the zoning ordinance and [relevant] regulations to its property," id. at 190, and (2) he had yet to seek "compensation [for the alleged taking] through the procedures the State ha[d] provided for doing so," id. at 194. In other words, as the Supreme Court recently explained, the Williamson ripeness rule dictates that "a Fifth Amendment claim is premature until it is clear that the [g]overnment has both taken property and denied just compensation." Horne v. Department of Agriculture, 133 S. Ct. 2053, 2062 (2013) (emphasis in original).

Second, the Williamson Court held that the ripeness rule applies beyond the context of Takings Clause to claims that are predicated on a resolution of the Takings Clause claim itself. In particular, the Williamson Court considered as "premature" (id. at 199), a separate claim under the Due Process Clause of the Fourteenth Amendment that the regulation in question was an invalid exercise of the police power. As the Court reasoned, resolving the Due Process Clause question depended "in significant part, upon an analysis of the effect the Commission's application of the zoning ordinance and subdivision regulations had on the...